ICICI Direct has given Buy recommendation for Bank of Baroda recommended buy rating on the stock with a target price of Rs 100 in its research with a target price of Rs. 100 in its research report issued on Jun 01, 2021
ICICI Direct’s research report on Bank of Baroda
Bank of Baroda (BoB) reported good set of numbers on the operating front with some improvement in asset quality as well. However, DTA impact due to shifting to new tax regime resulted into net loss during the quarter. NII was up 4.5% YoY but down 5% QoQ to Rs 7107 crore, mainly on account of interest reversals on NPA and interest on interest relief. Global net interest margin (NIM) declined ~5 bps QoQ to 2.72%, while domestic margins declined ~23 bps QoQ to 2.73%. NIMs were impacted by 36 bps due to reversals of interest. Other income grew 71% YoY led by recovery from written-off accounts. Provisions for the quarter remained elevated and increased QoQ to Rs 3586 crore with Rs 4593 crore for NPA provisions and reversal in Covid buffer of Rs 1663 crore. Though, PBT came in at Rs 2680 crore, shifting towards new tax regime had a DTA impact of Rs 3314 crore. As a result, the bank posted a net loss of Rs 1047 crore during the quarter.
Thus, we upgrade our rating from HOLD to BUY and revise our target price to Rs 100 (Rs 70 earlier), valuing the bank at ~0.75x FY23E ABV.